Advice for DoT 100/0 or 99/1 is there a beneficial difference?

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    Advice for DoT 100/0 or 99/1 is there a beneficial difference?

    I would appreciate some advice on getting our one rental property transferred into my beneficial interest as I have recently retired and now have the whole of my tax allowance to use against the rental income. I have researched and researched but would like some clarification about what to do . At present we are joint tenants so:
    1. Sever joint tenancy and put into tenants in common
    2. All income is paid into a bank account in my sole name and has been since day one of rental
    3. Fill in form 17
    4. Get solicitor to draw up Deed of Trust to support new beneficial interest of either 100/0 or 99/1

    now what I don’t understand is - is there any difference between having it split as 100/0 or 99/1? My solicitor has said he has only ever been asked to do 99/1 and never seen 100/0 splits and should seek advice from my accountant - I don’t have an accountant as I do self assessment returns myself! Is there an advantage or disadvantage to having it split either way? Is my understanding correct that if we came to sell the property we would then only benefit from one persons CGT allowance if the DoT is still in place as split 100/0 or do people submit another Form 17 and DoT prior to sale to get around this?
    apologies if my terminology isn’t quite right but any help or advice would be very gratefully received by all you wonderful knowledgable people.

    #2
    You have to do #4 before you do #3.

    You can't split the beneficial ownership 100:0, because that would no longer be joint ownership.
    99:1 is the most you can change it to - 100:0 is almost certainly something that's possible, but it's not what you want.

    And, yes, before any disposal you change the trust and resubmit form 17.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thank you jpkeates for your advice. I will now proceed with 99/1 and happy that you have clarified the situation for me.

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        #4
        Difference between 100:0 & 99:1?? 1%.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

        Comment


          #5
          Originally posted by theartfullodger View Post
          Difference between 100:0 & 99:1?? 1%.
          I know it’s 1% difference but was really asking what the legal implications are of either transferring it into 100/0 or 99/1. I’m not an expert in this field in any way shape or form and am merely asking for advice.

          Comment


            #6
            The way I would put the question is: Why bother keeping 1%?

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              #7
              Form 17 is a means to vary the joint ownership between H & W and pay less tax to HMRC . 99/1 ratio means on the limit and property is still under joint ownership.

              100/0 means the property is under sole beneficial ownership of one owner . The other joint owner has lost right to 50% part ownership.

              Comment


                #8
                Originally posted by Gordon999 View Post
                Form 17 is a means to vary the joint ownership between H & W and pay less tax to HMRC . 99/1 ratio means on the limit and property is still under joint ownership.

                100/0 means the property is under sole beneficial ownership of one owner . The other joint owner has lost right to 50% part ownership.
                But if the other owner has given away 49% he loses the right to get it back. Why keep 1% when the intention is effectively that the donee should enjoy the whole beneficial interest?

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                  #9
                  If the ownership is shared between A and B as tenants in common, the default position, in the absence of anything to the contrary is that the ownership is 50:50.
                  If that ownership is changed to 100:0, B no longer owns a share of the property, which is not something that can be achieved by a deed of trust, as far as I know.
                  And it would be irreversible, a future trust could not reset the ownership to 50:50.

                  It might be legally possible - because the position would be clear, but it would be impossible to put into place practically - I can't imagine that the land registry would simply remove B from the title

                  A "joint" ownership where one party owns none of the thing owned jointly is not joint ownership.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    We need to be clear that legal ownership and beneficial ownership are two distinct things.

                    If A and B, whether joint tenants or tenants in common, own property jointly then it is perfectly possible for A to assign his beneficial interest to B leaving B with 100% ownership. A and B will then hold the property on trust for B. B can call for the legal estate to be transferred to him and if he becomes the sole beneficial and legal owner the trust comes to an end. In a straightforward case one would expect the legal and beneficial interests to be dealt with at the same time as there is little point in A remaining on the title. There may though be cases where that cannot be done easily (for example the property is mortgaged) or where it is wished to avoid the expense of transferring the legal estate.

                    If A transfers his beneficial interest to B we have two distinct things: (a) the legal estate which is owned jointly by A and B and (b) the beneficial interest which is owned solely by B. The Land Registry will not register B as the sole proprietor on production of evidence that he is the sole beneficial owner. The Land Registry only deals with legal estates which (ignoring exceptions not relevant to this thread) can only be transferred by all the legal estate owners.

                    As I have been known to say before, a declaration of trust is not the correct instrument to use when one beneficiary is transferring his interest to the other or to a third party. There is no need to declare a trust because statute provides that one already exists. The appropriate instrument is an assignment.

                    Comment


                      #11
                      It is always an education to read Lawcruncher's posts: thank you.

                      Comment


                        #12
                        Lawcruncher,

                        Thank you for your detailed response.
                        thank you to everyone who has replied to help me understand it a bit better!!

                        Comment

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